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If a partner, under a RTD project, purchases a second-hand durable equipment, whose depreciation period has not been exceeded, is the cost relating to the unexpired depreciation period eligibile?

The art.23 of the Model Contract for RTD project says:

"The costs to be charged to the contract shall be calculated according to the following formula:

A/B x C x D

A = the period in months during which the durable equipment is used for the project after invoicing,
B = the depreciation period for the durable equipment: 36 months for computer equipment costing less than EUR 25 000 or 60 months for other equipment,
C = the actual cost of the durable equipment,
D = the percentage of usage of the durable equipment for the project."

If it is eligibile, how should this formula be changed for second-hand durable equipment?

• the actual cost is the price payed by the partner to buy the equipment?
• the period in months during which it is used correspond to the unexpired depreciation period?

Formula : A / B x C x D

A = the period in months during which the durable equipment is used for the project after invoicing,
B = the depreciation period for the durable equipment
C = the actual cost of the durable equipment (i.e.: the net price payed by the partner to buy the equipment)
D = the percentage of usage of the durable equipment for the project

If your entity has decided to depreciate a second-hand durable equipment, the initial cost of this equipment must be its cost of purchase.

Example:

You bought a second-hand durable equipment at the net price of 100.000€ the first day of the contract of the FP5 RTD Project in which you are involved. You used this equipment 50% of its available time. Its depreciation time is equal to 60 months.

At the end of the first year, you may justify the following cost:

12 / 60 x 100.000 x 50% = 10.000€

Nevertheless, a durable equipment has to be depreciated in your accounting system according to your national accounting laws. Consequently please have also a look on your national accounting laws. In some countries, the period of depreciation for a durable equipment is a maximum of x years. It means that if you buy a second-hand durable equipment you have to reduce your depreciation period by the depreciation period realised on this equipment in another entity.

Example :

A first legal entity has bought a durable equipment.
This durable equipment has been depreciated for 3 years in a specific country.
In this country, the national accounting law set a maximum depreciation period of 5 years for this type of durable equipment.
This durable equipment is sold by the first legal entity to another one.
This second legal company may depreciate this equipment for a maximum of: 5 years - 3 years = 2 years.

In conclusion, the depreciation system for a first or a second-hand durable equipment is the same by default but has also to take into consideration the national accounting law of the participant.